SP500 LDN TRADING UPDATE 28/07/25
***QUOTING ES1! FOR CASH US500 EQUIVALENT LEVELS SUBTRACT ~25 POINTS***
***WEEKLY ACTION AREA VIDEO TO FOLLOW AHEAD OF NY OPEN***
WEEKLY BULL BEAR ZONE 6380/90
WEEKLY RANGE RES 6515 SUP 6335
DAILY VWAP BULLISH 6390
WEEKLY VWAP BULLISH 6345
DAILY ONE TIME FRAMING UP - 6402
WEEKLY ONE TIME FRAMING UP - 6318
MONTHLY ONE TIME FRAMING UP - 5870
Balance: This refers to a market condition where prices move within a defined range, reflecting uncertainty as participants await further market-generated information. Our approach to balance includes favoring fade trades at the range extremes (highs/lows) while preparing for potential breakout scenarios if the balance shifts.
One-Time Framing Up (OTFU): This represents a market trend where each successive bar forms a higher low, signaling a strong and consistent upward movement.
One-Time Framing Down (OTFD): This describes a market trend where each successive bar forms a lower high, indicating a pronounced and steady downward movement..
GOLDMAN SACHS TRADING DESK VIEWS
RIGHT TAIL RISK REMAINS
FICC and Equities | 27 July 2025 |
“No matter how hard you train, somebody will train harder. No matter how hard you run, somebody will run harder. No matter how badly you want it, somebody will want it more. Be that Somebody.”
– Steve Prefontaine
The S&P 500 has already hit 14 all-time highs this year, achieving a flawless 5-for-5 performance last week. This surge is attributed to successful trade deals (notably a 15% agreement with Japan, with a similar EU deal anticipated soon), robust Q2 earnings, and clearer policy direction from Washington.
Despite elevated valuations, with the S&P 500 trading at a 22x forward 12-month P/E multiple (placing it in the 93rd percentile over the past 30 years), I believe there is still right-tail risk in the market. Investor positioning remains neutral, and index prices at all-time highs are somewhat misaligned. Retail and systematic bids continue to show resilience, while corporations are reentering the market in force as the buyback blackout period ends on 7/28. Additionally, the year’s most high-profile IPO is set to begin trading on Thursday, likely sustaining the current wave of AI enthusiasm.
According to GSPB data, last week saw a decline in US Fundamental Long/Short (L/S) Gross leverage by 1.2 points to 209.9% (93rd percentile over three years), while Net leverage remained unchanged at 52.4% (51st percentile over three years). The US Fundamental long/short ratio (market value) rose slightly by 0.3% to 1.666 (13th percentile over three years).
Single stocks were modestly net bought last week (+0.3 standard deviations), driven by risk unwinds, with short covers outpacing long sales by a ratio of 1.5 to 1. Notional de-grossing in US single stocks—combining long sales and short covers—was the largest in six months and ranks in the 94th percentile over a five-year lookback. De-grossing activity occurred in 8 of 11 US sectors, led by Information Technology (long sales > short covers), Consumer Discretionary (short covers > long sales), Energy (long sales > short covers), and Utilities (long sales > short covers).
Hedge funds unwound risk in US TMT stocks at their fastest pace since July 2024 (98th percentile over five years), with long sales outpacing short covers by a ratio of 2 to 1. Most TMT subsectors experienced risk unwinds, led by Semiconductors & Semiconductor Equipment (long sales > short covers), Software (short covers > long sales), IT Services (short covers > long sales), and Media (short covers > long sales).
Notably, net exposure in Semiconductors & Semiconductor Equipment (as a percentage of total US Prime book) remains near five-year highs in the 94th percentile, while Software & Services net exposure is at five-year lows, sitting in the 2nd percentile.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!